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Horizontal Equity Implications of the Lottery Tax

  • Stranahan, Harriet
  • Borg, Mary O.
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    Based on Musgrave’s traditional definition of horizontal equity, this paper estimates whether the lottery tax results in a differential tax burden by race, educational attainment, or age within households that have equal economic positions. A second question that is addressed is whether lottery advertising intensifies any horizontal inequities that exist. Indeed, this study finds that, among individuals with otherwise identical characteristics, African Americans bear a significantly higher lottery tax burden. Other minority groups and individuals with the lowest educational attainment also bear a larger lottery tax burden, although the difference is not significant at the ten percent level. In addition, the results suggest that lottery advertising has its greatest impact on African Americans, thus intensifying the horizontal inequity of the lottery tax and resulting in a greater tax burden for African Americans as compared to identical Caucasians.

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    Article provided by National Tax Association in its journal National Tax Journal.

    Volume (Year): 51 (1998)
    Issue (Month): n. 1 (March)
    Pages: 71-82

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    Handle: RePEc:ntj:journl:v:51:y:1998:i:n._1:p:71-82
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    1. Jack Habib, 1979. "Horizontal Equity with Respect to Family Size," Public Finance Review, SAGE Publishing, vol. 7(3), pages 283-302, July.
    2. Jerome F. Heavey, 1978. "The Incidence of State Lottery Taxes," Public Finance Review, SAGE Publishing, vol. 6(4), pages 415-426, October.
    3. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
    4. Kondor, Yaakov, 1976. "Optimal Deviations from Horizontal Equity: The Case of Family Size: A Reply," Public Finance = Finances publiques, , vol. 31(3), pages 440-42.
    5. Kondor, Yaakov, 1975. "Optimal Deviations from Horizontal Equity: The Case of Family Size," Public Finance = Finances publiques, , vol. 30(2), pages 216-21.
    6. Shoup, Carl S, 1988. "Distribution of Benefits from Government Services: Horizontal Equity," Public Finance = Finances publiques, , vol. 43(1), pages 1-18.
    7. Lin, Tsai-Fen & Schmidt, Peter, 1984. "A Test of the Tobit Specification against an Alternative Suggested by Cragg," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 174-77, February.
    8. Borg, Mary O. & Mason, Paul M., 1988. "The Budgetary Incidence of a Lottery to Support Education," National Tax Journal, National Tax Association, vol. 41(1), pages 75-85, March.
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